US rate rise expectations spook US investors, US dollar strengthens, gold and oil lower, ASX futures down 64 points

Jobs numbers in the US were too strong for the liking of investors on Friday night, with the 295k jobs added (+235k expected) and 5.5% official unemployment rate raising bets of an early rate rise. For the same reason that European equities have been rallying on loosening money supply (don't forget to email customerservice@rivkin.com.au or phone Jonathan Casey on 1300 748 546 if you're interested in buying a 10-stock German Blue Chip Portfolio), US investors fear the prospect of tightening monetary policy and reacted to it poorly on Friday. All major North American equity indices were down over one percent, and the sell-off spilled over into oil and gold markets as well. You can see from today's first chart that this has brought the US S&P 500 (SP500.I in black) back to being just 0.81% higher for 2015 so far, with Australia's ASX 200 cash futures (ASXSP200.I in orange) still a healthy 7.96% higher for the year to date.

Today's second chart shows the big sell-off in US dollar spot gold (XAUUSD), compounded by the strengthening dollar. That big red candle that you can see at the far right represents a drop of around US$31 dollars during the last session. While there is some technical buying support at US$1,130-US$1,145 level, any sense that the market gets of further US dollar strengthening will repel traders from getting back into long gold positions. It will be an interesting space to watch, because the last time the US dollar was this strong was about 10 years ago, when the price of gold was around US$400 per ounce. The long-term intrinsic value that holders of gold attach to it remains a complete mystery to me, so I would urge those who like to trade it to do just that - trade it, rather than 'hold' it. It's showing some volatility and it is a nice liquid instrument to technically analyse on a short-term basis.

The world remains in dis-inflationary mode - so find great brands and hold them, which is invariably a bi-product of Rivkin's Blue Chip investment strategy. I'll remind everyone that we're three-weeks out from the next Rivkin April Blue Chip Portfolio release, and I would caution those who think the hunt for yield has gone too far (just as I did almost two years ago in this video), because risk free rates in Australia can get lower than what they are now and the weight of Australia's superannuation money can continue to pile into equities for as long as it has to, in order to meet the lifestyle liabilities of those in or approaching pension mode.

Today‚Äôs charts are taken from the Rivkin Trader platform. 30,000 global instruments available to trade including FX, commodities, index, ETFs and international shares. Trade Australian share CFDs from just $8 or 0.10%. Click here or phone 1300 748 546 to get your free $100,000 demo account.


Upcoming economic announcements: Japanese GDP out at 10:50am, Sydney time.

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